[Federal Register Volume 89, Number 153 (Thursday, August 8, 2024)]
[Notices]
[Pages 64992-65001]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-17504]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100642; File No. SR-SAPPHIRE-2024-05]


Self-Regulatory Organizations; MIAX Sapphire, LLC; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Rule 531, Reports and Market Data Products, To Adopt the ``Liquidity 
Taker Event Report--Complex Orders'' and the ``Liquidity Taker Event 
Report--Resting Simple Orders''

August 2, 2024.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on July 24, 2024, MIAX Sapphire, LLC (``MIAX Sapphire'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Exchange Rule 531, Reports and 
Market Data Products, to: (1) adopt rule text for the ``Liquidity Taker 
Event Report--Complex Orders''; (2) adopt rule text for the ``Liquidity 
Taker Event Report--Resting Simple Orders''; and (3) make non-
substantive, clarifying changes to current Exchange Rules 531(a) and 
(b).
    The text of the proposed rule change is available on the Exchange's 
website at https://www.miaxglobal.com/markets/us-options/miax-sapphire/rule-filings, at the Exchange's principal office, and at the 
Commission's Public Reference Room.

[[Page 64993]]

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange currently offers the Liquidity Taker Event Report 
(referred to herein as the ``Simple Order Report''), which is a Member 
\3\-specific report and helps Members to better understand by how much 
time a particular order missed executing against a specific order 
resting on the Exchange's Simple Order Book.\4\ The current Liquidity 
Taker Event Report is described under Exchange Rule 531(a).\5\ The 
Exchange now proposes to: (1) amend Exchange Rule 531(b) \6\ to provide 
for the new ``Liquidity Taker Event Report--Complex Orders'' (referred 
to herein as the ``Complex Order Report''); \7\ (2) adopt new Exchange 
Rule 531(c) to provide for the new ``Liquidity Taker Event Report--
Resting Simple Orders'' (referred to herein as the ``Resting Simple 
Order Report''); \8\ (3) make corresponding changes to current Exchange 
Rule 531(a) to specify that it is for the Simple Order Report; and (4) 
renumber current Exchange Rule 531(b), Market Data Products, to 
Exchange Rule 531(d).
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    \3\ The term ``Member'' means an individual or organization that 
is registered with the Exchange pursuant to Chapter II of MIAX 
Sapphire Rules for purposes of trading on the Exchange as an 
``Electronic Exchange Member'' or ``Market Maker.'' Members are 
deemed ``members'' under the Exchange Act. See Exchange Rule 100.
    \4\ The ``Simple Order Book'' is the Exchange's regular 
electronic book of orders and quotes. See Exchange Rule 100.
    \5\ See Exchange Rule 531(a) and Securities Exchange Act Release 
No. 100539 (July 15, 2024) (In the Matter of the Application of MIAX 
Sapphire, LLC for Registration as a National Securities Exchange; 
Findings, Opinion, and Order of the Commission).
    \6\ Currently, Exchange Rule 531(b) is titled ``Market Data 
Products'' and provides the rule text for the Open-Close Report. See 
current Exchange Rule 531(b). Pursuant to this proposal, the 
Exchange proposes to move the rule text for Market Data Products to 
now be renumbered as Exchange Rule 531(d). Proposed Exchange Rule 
531(c) will be for the Resting Simple Order Report, described below. 
The Exchange does not propose to amend any of the rule text for 
Market Data Products as currently stated in Exchange Rule 531.
    \7\ The proposed rule change is substantively identical to 
Complex Order Reports available through the Exchange's affiliates 
(Miami International Securities Exchange, LLC (``MIAX'') and MIAX 
Emerald, LLC (``MIAX Emerald'')) as it relates to MIAX and MIAX 
Emerald markets. See MIAX Rule 531(b) and MIAX Emerald Rule 531(b).
    \8\ The proposed rule change is substantively identical to 
Resting Simple Order Reports available through the Exchange's 
affiliates, MIAX and MIAX Emerald, as it relates to MIAX and MIAX 
Emerald markets. See MIAX Rule 531(c) and MIAX Emerald Rule 531(c).
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Complex Order Report
    The proposed Complex Order Report would be substantially similar to 
the existing Simple Order Report, but would include data concerning a 
Member's complex orders.\9\ The Exchange also proposes to amend the 
name of the existing Liquidity Taker Event Report in Exchange Rule 
531(a) to now be titled the ``Liquidity Taker Event Report--Simple 
Orders'' and amend references in Exchange Rule 531(a) accordingly.
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    \9\ In sum, a ``complex order'' is ``any order involving the 
concurrent purchase and/or sale of two or more different options in 
the same underlying security (the `legs' or `components' of the 
complex order), for the same account, in a conforming or non-
conforming ratio. . . .'' See Exchange Rule 518(a).
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    The Simple Order Report includes information about incoming orders 
seeking to remove resting orders from the Simple Order Book. The 
proposed Complex Order Report would include the same information about 
incoming complex orders that seek to remove complex orders resting on 
the Strategy Book.\10\ Two other differences between the proposed 
Complex Order Report and the Simple Order Report are that the proposed 
Complex Order Report will include the Complex SBBO \11\ in place of the 
SBBO and Complex ABBO \12\ in place of the ABBO, as described further 
below. These are minor differences designed to provide the SBBO and 
ABBO that are relevant to trading complex orders. Otherwise, the 
content and dissemination of the proposed Complex Order Report set 
forth under amended Exchange Rule 531(b) will be identical to that of 
the Simple Order Report under Exchange Rule 531(a). Other than the 
difference set forth above, the Exchange represents that there are no 
other differences between simple orders and complex orders that would 
necessitate any other changes to the proposed Complex Order Report or 
render the effects or use of the proposed Complex Order Report as 
different from the Simple Order Report.
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    \10\ The term ``complex strategy'' means a particular 
combination of components and their ratios to one another. New 
complex strategies can be created as the result of the receipt of a 
complex order or by the Exchange for a complex strategy that is not 
currently in the System. The Exchange may limit the number of new 
complex strategies that may be in the System at a particular time 
and will communicate this limitation to Members via Regulatory 
Circular. See Exchange Rule 518(a). The ``Strategy Book'' is the 
Exchange's electronic book of complex orders. See Exchange Rule 100. 
The Strategy Book is organized by complex strategy in that 
individual orders for a defined complex strategy are organized 
together in a book that is separate from the orders for a different 
complex strategy.
    \11\ The term ``SBBO'' means the Exchange's best bid and offer 
on the Simple Order Book. See Exchange Rule 100. The Complex SBBO 
for a particular complex strategy is calculated using the Implied 
Complex Sapphire Best Bid or Offer (``icSBBO'') combined with the 
best price currently available for that particular complex strategy 
on the Strategy Book to establish the Exchange's best net bid or 
offer for that complex strategy. The icSBBO is calculated using the 
best price from the Simple Order Book for each component of a 
complex strategy including displayed and non-displayed trading 
interest. For stock-option orders, the icSBBO for a complex strategy 
is calculated using the best price (whether displayed or non-
displayed) on the Simple Order Book in the individual option 
component(s), and the NBBO in the stock component. See Exchange Rule 
518(a). The term ``NBBO'' means the national best bid or offer as 
calculated by the Exchange based on market information received by 
the Exchange from OPRA. See Exchange Rule 100.
    \12\ The term ``ABBO'' or ``Away Best Bid or Offer'' means the 
best bid(s) or offer(s) disseminated by other Eligible Exchanges 
(defined in Exchange Rule 1400(g)) and calculated by the Exchange 
based on market information received by the Exchange from the 
Options Price Reporting Authority (``OPRA''). See Exchange Rule 100. 
The Complex ABBO is calculated using the ABBO for each component of 
a complex strategy to establish the away markets' best net bid or 
offer for a complex strategy.
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    Like the Simple Order Report, the proposed Complex Order Report is 
an optional product \13\ available to Members. Currently, the Exchange 
provides real-time prices and analytics in the marketplace. The 
Exchange believes the additional data points from the matching engine 
outlined below may help Members gain a better understanding about their 
complex order interactions with the Exchange. The Exchange believes the 
proposed Complex Order Report will provide Members with an opportunity 
to learn more about better opportunities to access liquidity and 
receive better execution rates when trading complex orders. The 
proposed Complex Order Report will increase transparency and 
democratize information so that all firms that subscribe to the 
proposed Complex Order Report have access to the same information on an 
equal basis, even for firms that do not have the

[[Page 64994]]

appropriate resources to generate a similar report regarding 
interactions with the Exchange. Like the Simple Order Report, none of 
the components of the proposed Complex Order Report include real-time 
market data.
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    \13\ The Exchange intends to submit a separate filing with the 
Commission pursuant to section 19(b)(1) to propose fees for the 
Simple Order Report, proposed Complex Order Report, and proposed 
Resting Simple Order Report.
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    Members generally would use a liquidity accessing order if there is 
a high probability that it will execute against an order resting on the 
Exchange's Simple Order Book. Like the Simple Order Report, the 
proposed Complex Order Report would identify by how much time an order 
that may have been marketable missed an execution. In the case of the 
proposed Complex Order Report, the incoming order would be a complex 
order submitted to trade against a resting order for a complex 
strategy. The proposed Complex Order Report will provide greater 
visibility into the missed trading execution, which will allow Members 
to optimize their models and trading patterns to yield better execution 
results when trading complex orders.
    Like the Simple Order Report, the proposed Complex Order Report 
will be a Member-specific report and will help Members to better 
understand by how much time a particular order, in this case a complex 
order, missed executing against a specific resting order, thus allowing 
that Member to determine whether it wants to invest in the necessary 
resources and technology to mitigate missed executions against certain 
resting orders on the Exchange's Strategy Book. For example, Member A 
submits a complex order that is posted to the Strategy Book and then, 
within 400 microseconds of the entry of Member A's complex order, 
Member B enters a marketable complex order to execute against Member 
A's resting complex order. Immediately thereafter, Member C, also 
within 400 microseconds of the entry of Member A's complex order, sends 
a marketable complex order to execute against Member A's resting 
complex order. Because Member B's complex order is received by the 
Exchange before the complex order for Member C, Member B's complex 
order executes against Member A's resting complex order. If Member C 
were to subscribe to the proposed Complex Order Report, it would be 
provided the data points necessary for that firm to calculate by how 
much time it missed executing against Member A's resting complex order.
    Like the Simple Order Report, the Exchange proposes to provide the 
proposed Complex Order Report on a T+1 basis. As further described 
below, the proposed Complex Order Report will be specifically tailored 
to the Member that is subscribed to the Complex Order Report and any 
data included in the Complex Order Report that relates to a Member 
other than the Member receiving the Complex Order Report will be 
anonymized.
    The Exchange's affiliates, MIAX and MIAX Emerald, adopted their 
comparable Complex Order Reports in response to demand from their 
members for data concerning the timeliness of their incoming complex 
orders and executions against resting orders on those markets.\14\ 
Members of MIAX and MIAX Emerald have found the Simple Order Reports 
and Complex Order Reports helpful and the Exchange believes that its 
Members will request similar information from the Exchange regarding 
their simple orders and complex orders. For MIAX and MIAX Emerald, this 
came in the form of requests by members to those exchanges' trading 
operations personnel for information concerning the timeliness of their 
incoming simple orders and complex orders and efficacy of their 
attempts to execute against resting liquidity on their books. The 
purpose of the proposed Complex Order Report is to provide a 
subscribing Member (``Recipient Member'') the necessary data in a 
standardized format on a T+1 and equal basis.
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    \14\ See MIAX Rule 531(b) and MIAX Emerald Rule 531(b). The 
Exchange notes that its other affiliate, MIAX PEARL, LLC (``MIAX 
Pearl'') only provides for the similar Simple Order Report and 
Resting Simple Order Report as complex orders are not available for 
trading on the options trading facility of MIAX Pearl.
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    Similar to current Exchange Rule 531(a) regarding the Simple Order 
Report, amended Exchange Rule 531(b) would provide that the proposed 
Complex Order Report is a daily report that provides a Recipient Member 
with its liquidity response time details for executions of an order 
resting on the Strategy Book, where that Recipient Member submitted a 
complex order that attempted to execute against such resting complex 
order within a certain timeframe.
Complex Order Report Content
    The content of the proposed Complex Order Report would be identical 
to the Simple Order Report, but for two minor differences discussed 
below. Proposed paragraph (b)(1) of Exchange Rule 531 would describe 
the content of the proposed Complex Order Report and delineate which 
information would be provided regarding the resting order,\15\ the 
response that successfully executed against the resting order, and the 
response submitted by the Recipient Member that missed executing 
against the resting order. It is important to note that the content of 
the proposed Complex Order Report will be specific to the Recipient 
Member and the proposed Complex Order Report will not include any 
information related to any Member other than the Recipient Member. The 
Exchange will restrict all other market participants, including the 
Recipient Member, from receiving another market participant's data.
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    \15\ Like the Simple Order Report, only displayed orders will be 
included in the proposed Complex Order Report. The Exchange notes 
that it does not currently offer any non-displayed order types.
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    Resting Order Information. The content of the proposed Complex 
Order Report set forth under amended Exchange Rule 531(b)(1)(i) is 
identical to the content of the Simple Order Report under Exchange Rule 
531(a)(1)(i). However, as noted above, the content of the proposed 
Complex Order Report would be limited to incoming complex orders that 
seek to remove liquidity from the Exchange's Strategy Book.
    Amended Exchange Rule 531(b)(1)(i) would provide that the following 
information would be included in the proposed Complex Order Report 
regarding the resting order: (A) the time the resting order was 
received by the Exchange; \16\ (B) symbol; \17\ (C) order reference 
number, which is a unique reference number assigned to a new complex 
order at the time of receipt; \18\ (D) whether the Recipient Member is 
an Affiliate \19\ of the Member that entered the resting order; \20\ 
(E) origin type (e.g.,

[[Page 64995]]

Priority Customer,\21\ Market Maker \22\); \23\ (F) side (buy or sell); 
\24\ and (G) displayed price and size of the resting order.\25\
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    \16\ This information is also included in the Simple Order 
Report. See Exchange Rule 531(a)(1)(i)(A).
    \17\ This information is also included in the Simple Order 
Report. See Exchange Rule 531(a)(1)(i)(B).
    \18\ This information is also included in the Simple Order 
Report. See Exchange Rule 531(a)(1)(i)(C).
    \19\ The term ``affiliate'' of or person ``affiliated with'' 
another person means a person who, directly, or indirectly, 
controls, is controlled by, or is under common control with, such 
other person. See Exchange Rule 100.
    \20\ This information is also included in the Simple Order 
Report. See Exchange Rule 531(a)(1)(i)(D). The Complex Order Report 
will simply indicate whether the Recipient Member is an Affiliate of 
the Member that entered the resting order and not include any other 
information that may indicate the identity of the Member that 
entered the resting order.
    \21\ The term ``Priority Customer'' means a person or entity 
that (i) is not a broker or dealer in securities, and (ii) does not 
place more than 390 orders in listed options per day on average 
during a calendar month for its own beneficial account(s). The 
number of orders shall be counted in accordance with Interpretation 
and Policy .01 to Exchange Rule 100. See Exchange Rule 100.
    \22\ The term ``Market Maker'' or ``MM'' means a Member 
registered with the Exchange for the purpose of making markets in 
options contracts traded on the Exchange and that is vested with the 
rights and responsibilities specified in Chapter VI of the 
Exchange's Rules. See Exchange Rule 100.
    \23\ This information is also included in the Simple Order 
Report. See Exchange Rule 531(a)(1)(i)(E).
    \24\ This information is also included in the Simple Order 
Report. See Exchange Rule 531(a)(1)(i)(F).
    \25\ This information is also included in the Simple Order 
Report. See Exchange Rule 531(a)(1)(i)(G). The Exchange notes that 
the displayed price and size are also disseminated via the 
Exchange's proprietary data feeds.
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    Execution Information. Amended Exchange Rule 531(b)(1)(ii) would 
provide that the following information would be included in the 
proposed Complex Order Report regarding the execution of the resting 
order: (A) the Complex SBBO at the time of execution; \26\ (B) the 
Complex ABBO at the time of execution; \27\ (C) the time the first 
response that executes against the resting order was received by the 
Exchange and the size of the execution and type of the response; \28\ 
(D) the time difference between the time the resting order was received 
by the Exchange and the time the first response that executes against 
the resting order was received by the Exchange; \29\ and (E) whether 
the response was entered by the Recipient Member.\30\ If the resting 
order executes against multiple contra-side responses, only the Complex 
SBBO and Complex ABBO at the time of the execution against the first 
response will be included.
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    \26\ Similar information is included in the Simple Order Report. 
Exchange Rule 531(b)(1)(ii)(A) would similarly provide that if the 
resting order executes against multiple contra-side responses, only 
the Complex SBBO at the time of the execution against the first 
response will be included.
    \27\ Similar information is included in the Simple Order Report. 
See Exchange Rule 531(a)(1)(ii)(B). Exchange Rule 531(b)(1)(ii)(B) 
would similarly provide that if the resting order executes against 
multiple contra-side responses, only the Complex ABBO at the time of 
the execution against the first response will be included.
    \28\ This information is also included in the Simple Order 
Report. See Exchange Rule 531(a)(1)(ii)(C). The time the Exchange 
received the response order would be in nanoseconds and would be the 
time the response was received by the Exchange's network, which is 
before the time the response would be received by the System. The 
type of responses that would be identified in the proposed Complex 
Order Report are Standard Quotes. The term ``quote'' or 
``quotation'' means a bid or offer entered by a Market Maker as a 
firm order that updates the Market Maker's previous bid or offer, if 
any. When the term order is used in the Exchange's Rules and a bid 
or offer is entered by the Market Maker in the option series to 
which such Market Maker is registered, such order shall, as 
applicable, constitute a quote or quotation for purposes of the 
Exchange's Rules. See Exchange Rule 100.
    \29\ The time difference would be provided in nanoseconds. This 
information is also included in the Simple Order Report. See 
Exchange Rule 531(a)(1)(ii)(D).
    \30\ This information is also included in the Simple Order 
Report. See Exchange Rule 531(a)(1)(ii)(E).
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    The content of the proposed Complex Order Report set forth under 
amended Exchange Rule 531(b)(1)(ii) is identical to the content of the 
Simple Order Report under Exchange Rule 531(a)(1)(ii) with two minor 
differences. The Simple Order Report includes the SBBO, which is the 
Exchange's best bid or offer, and the ABBO, which is the best bid or 
offer of away exchanges. In their place, the proposed Complex Order 
Report would include the Complex SBBO and Complex ABBO. The Complex 
SBBO is calculated using the SBBO for each component of a complex 
strategy to establish the Exchange's best net bid or offer for a 
complex strategy. As discussed above, the Complex SBBO is calculated 
using the icSBBO \31\ combined with the best price currently available 
on the Strategy Book to establish the Exchange's best net bid or offer 
for a complex strategy.\32\ The Complex ABBO is calculated using the 
ABBO for each component of a complex strategy to establish the away 
markets' best net bid or offer for a complex strategy using OPRA data. 
The Exchange is providing the Complex SBBO and Complex ABBO because 
both are relevant and tailored to a Member that is entering a complex 
order to remove liquidity as part of a complex strategy and, therefore, 
more germane to the purpose of the Complex Order Report.
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    \31\ The Implied Complex Sapphire Best Bid or Offer (``icSBBO'') 
is a calculation that uses the best price from the Simple Order Book 
for each component of a complex strategy including displayed and 
non-displayed trading interest. For stock-option orders, the icSBBO 
for a complex strategy will be calculated using the best price 
(whether displayed or non-displayed) on the Simple Order Book in the 
individual option component(s), and the NBBO in the stock component. 
See Exchange Rule 518(a). The term ``NBBO'' means the national best 
bid or offer as calculated by the Exchange based on market 
information received by the Exchange from the appropriate Securities 
Information Processor (``SIP''). See id.
    \32\ See supra note 11.
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    Recipient Member's Response Information. The content of the 
proposed Complex Order Report set forth under amended Exchange Rule 
531(b)(1)(iii) is identical to the content of the Simple Order Report 
under Exchange Rule 531(a)(1)(iii). Amended Exchange Rule 
531(b)(1)(iii) would provide that the following information would be 
included in the Complex Order Report regarding complex order(s) sent by 
the Recipient Member: (A) Recipient Member identifier; \33\ (B) the 
time difference between the time the first response that executes 
against the resting order was received by the Exchange and the time of 
each complex order sent by the Recipient Member, regardless of whether 
it executed or not; \34\ (C) size and type of each complex order 
submitted by the Recipient Member; \35\ and (D) response reference 
number, which is a unique reference number attached to the response by 
the Recipient Member.\36\
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    \33\ This information is also included in the Simple Order 
Report. See Exchange Rule 531(a)(1)(iii)(A).
    \34\ This information is also included in the Simple Order 
Report. See Exchange Rule 531(a)(1)(iii)(B). For purposes of 
calculating this duration of time, the Exchange will use the time 
the first response that executes against the resting order and the 
Recipient Member's response(s) is received by the Exchange's 
network, both of which would be before the order and response(s) 
would be received by the System. This time difference would be 
provided in nanoseconds.
    \35\ This information is also included in the Simple Order 
Report. See Exchange Rule 531(a)(1)(iii)(C).
    \36\ This information is also included in the Simple Order 
Report. See Exchange Rule 531(a)(1)(iii)(D).
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Timeframe for Data Included in the Complex Order Report
    The timeframe for data to be included the proposed Complex Order 
Report set forth under amended Exchange Rule 531(b)(2) is identical to 
the timeframe for data included in the Complex Order Reports that are 
available for MIAX and MIAX Emerald.\37\ Proposed paragraph (b)(2) of 
Exchange Rule 531 would provide that the Complex Order Report would 
include the data set forth under Exchange Rule 531(b)(1) described 
above for executions and contra-side responses that occurred within 400 
microseconds of the time the resting order was received by the 
Exchange. The Exchange believes 400 microseconds is the appropriate 
timeframe because it understands most Members that would be interested 
in subscribing to the proposed Complex Order Report would submit their 
incoming liquidity removing complex orders within 400 microseconds of 
the time a contra-side complex order is posted to the Strategy Book.
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    \37\ See MIAX Rule 531(b)(2) and MIAX Emerald Rule 531(b)(2).
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Scope of Data Included in the Report
    The scope of data to be included the proposed Complex Order Report 
set forth under amended Exchange Rule 531(b)(3) is identical to the 
scope of data included in the Simple Order Report

[[Page 64996]]

under Exchange Rule 531(a)(3). Proposed paragraph (b)(3) of Exchange 
Rule 531 would provide that the Complex Order Report will only include 
trading data related to the Recipient Member and, subject to the 
proposed paragraph (4) of Exchange Rule 531(b) described below, will 
not include any other Member's trading data other than that listed in 
paragraphs (1)(i) and (ii) of Exchange Rule 531(b), described above. 
Like the Simple Order Report, the proposed Complex Order Report will 
not include information related to any Member other than the Recipient 
Member.\38\
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    \38\ See Exchange Rule 531(a)(3).
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Historical Data
    Proposed paragraph (b)(4) of Exchange Rule 531 would specify that 
the Complex Order Report will contain historical data from the prior 
trading day and will be available after the end of the trading day, 
generally on a T+1 basis. This is identical to the timeframe for when 
the Simple Order Report is made available.\39\
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    \39\ See Exchange Rule 531(a)(4).
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Resting Simple Order Report
    The Exchange proposes to amend Exchange Rule 531 to provide for the 
new Resting Simple Order Report.\40\ The proposed Resting Simple Order 
Report will be an optional product \41\ available to Members. But for 
the modified timeframe and one difference described below, the proposed 
Resting Simple Order Report would include the same data as the Simple 
Order Report currently described under Exchange Rule 531(a), except 
that the Resting Simple Order Report will focus on executions and 
contra-side responses that occurred after 200 microseconds of the time 
the resting order was received by the Exchange and within 200 
microseconds of receipt of any Member's first attempt to execute 
against the resting order after the initial 200 microsecond time period 
has expired as described further below.
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    \40\ The proposed rule change to adopt the Resting Simple Order 
Report is substantively identical to reports offered by the 
Exchange's affiliates, MIAX, MIAX Pearl and MIAX Emerald. See MIAX 
Rule 531(c), MIAX Pearl Rule 531(c), and MIAX Emerald Rule 531(c).
    \41\ See supra note 13.
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    The Exchange believes the additional data points from the matching 
engine outlined below for the proposed Resting Simple Order Report may 
also help Members gain a better understanding about their interactions 
with the Exchange. The Exchange believes the proposed Resting Simple 
Order Report will provide Members with an opportunity to learn more 
about better opportunities to access liquidity and receive better 
execution rates. The proposed Resting Simple Order Report will increase 
transparency and democratize information so that all firms that 
subscribe to the proposed Resting Simple Order Report have access to 
the same information on an equal basis, even for firms that do not have 
the appropriate resources to generate a similar report regarding 
interactions with the Exchange. None of the components of the proposed 
Resting Simple Order Report include real-time market data.
    Members generally would use a liquidity accessing order if there is 
a high probability that it will execute against an order resting on the 
Simple Order Book. The proposed Resting Simple Order Report would 
identify by how much time an order that may have been marketable missed 
an execution but would focus on a later timeframe than the Simple Order 
Report and Complex Order Report. The proposed Resting Simple Order 
Report will provide greater visibility into the missed trading 
execution, which will allow Members to optimize their models and 
trading patterns to yield better execution results.
    The proposed Resting Simple Order Report will be a Member-specific 
report and will help Members to better understand by how much time a 
particular order missed executing against a specific resting order, 
thus allowing that Member to determine whether it wants to invest in 
the necessary resources and technology to mitigate missed executions 
against certain resting orders on the Simple Order Book. The Exchange 
proposes to provide the Resting Simple Order Report on a T+1 basis. As 
further described below, the proposed Resting Simple Order Report will 
be specific and tailored to the Member that is subscribed to the 
Resting Simple Order Report and any data included in the Resting Simple 
Order Report that relates to a Member other than the Member receiving 
the Resting Simple Order Report will be anonymized.
    The Exchange's affiliates, MIAX, MIAX Pearl, and MIAX Emerald, 
adopted their comparable Resting Simple Order Reports in response to 
demand from their members for data concerning the timeliness of their 
incoming orders and executions against certain resting orders that have 
been resting on the Simple Order Books of MIAX, MIAX Pearl, and MIAX 
Emerald, for at least 200 microseconds and within 200 microseconds of 
receipt of the first attempt to execute against the resting order after 
the initial 200 microsecond time period has expired.\42\ Members of 
MIAX, MIAX Pearl, and MIAX Emerald have found the Resting Simple Order 
Reports helpful and the Exchange believes that its Members will request 
similar information from the Exchange regarding their resting simple 
orders. For MIAX, MIAX Pearl, and MIAX Emerald, this came in the form 
of requests by members to those exchanges' trading operations personnel 
for information concerning the timeliness of their incoming simple 
orders and efficacy of their attempts to execute against resting 
liquidity on their books. The purpose of the proposed Resting Simple 
Order Report is to provide Members the necessary data in a standardized 
format on a T+1 basis to those that subscribe to the Resting Simple 
Order Report on an equal basis.
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    \42\ See supra note 40.
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    Proposed Exchange Rule 531(c) would provide that the Resting Simple 
Order Report is a daily report that provides a Recipient Member with 
its liquidity response time details for executions of an order resting 
on the Simple Order Book, where that Recipient Member attempted to 
execute against such resting order within an extended timeframe that 
meets certain criteria described below.
Resting Simple Order Report Content
    The content of the proposed Resting Simple Order Report is 
basically identical to that of the existing Simple Order Report 
described under Exchange Rule 531(a) with two differences. The first 
difference is the timeframe of the proposed Resting Simple Order Report 
mentioned above and described in more detail below. The second 
difference is that, unlike the existing Simple Order Report, the 
proposed Resting Simple Order Report would not include the time 
difference between the time the resting order was received by the 
Exchange and the time the first response that executes against the 
resting order was received by the Exchange. Each of these differences 
are described below. All other aspects of the proposed Resting Simple 
Order Report are identical to the existing Simple Order Report 
described under Exchange Rule 531(a).
    Like current paragraph (a)(1) of Exchange Rule 531 for the existing 
Simple Order Report, proposed paragraph (c)(1) of Exchange Rule 531 
would describe the content of the proposed Resting Simple Order Report 
and delineate which information would be provided regarding the resting

[[Page 64997]]

order,\43\ the response that successfully executed against the resting 
order, and the response submitted by the Recipient Member that missed 
executing against the resting order. It is important to note that the 
content of the Resting Simple Order Report will be specific to the 
Recipient Member and the Resting Simple Order Report will not include 
any information related to any Member other than the Recipient Member, 
other than certain information about the resting order described below. 
The Exchange will restrict all other market participants, including the 
Recipient Member, from receiving another market participant's data.
---------------------------------------------------------------------------

    \43\ Only displayed orders will be included in the Resting 
Simple Order Report. The Exchange notes that it does not currently 
offer any non-displayed orders types on its options trading 
platform.
---------------------------------------------------------------------------

    Resting Order Information. Like current paragraph (a)(1)(i) of 
Exchange Rule 531 for the existing Simple Order Report, proposed 
Exchange Rule 531(c)(1)(i) would provide that the following information 
would be included in the Resting Simple Order Report regarding the 
resting order: (A) the time the resting order was received by the 
Exchange; \44\ (B) symbol; (C) order reference number, which is a 
unique reference number assigned to a new order at the time of receipt; 
(D) whether the Recipient Member is an Affiliate of the Member that 
entered the resting order; \45\ (E) origin type (e.g., Priority 
Customer, Market Maker); (F) side (buy or sell); and (G) displayed 
price and size of the resting order.\46\
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    \44\ The time the Exchange received the resting order would be 
in nanoseconds and is the time the resting order was received by the 
Exchange's network.
    \45\ The Resting Simple Order Report will simply indicate 
whether the Recipient Member is an Affiliate of the Member that 
entered the resting order and not include any other information that 
may indicate the identity of the Member that entered the resting 
order.
    \46\ The Exchange notes that the displayed price and size are 
also disseminated via the Exchange's proprietary data feeds and 
OPRA. The Exchange also notes that the displayed price of the 
resting order may be different than the ultimate execution price. 
This may occur when a resting order is displayed and ranked at 
different prices upon entry to avoid a locked or crossed market.
---------------------------------------------------------------------------

    Execution Information. Like current paragraph (a)(1)(ii) of 
Exchange Rule 531 for the existing Simple Order Report, proposed 
Exchange Rule 531(c)(1)(ii) would provide that the following 
information would be included in the Resting Simple Order Report 
regarding the execution of the resting order: (A) the SBBO at the time 
of execution; \47\ (B) the ABBO at the time of execution; \48\ (C) the 
time first response that executes against the resting order was 
received by the Exchange and the size of the execution and type of the 
response; \49\ and (D) whether the response was entered by the 
Recipient Member. If the resting order executes against multiple 
contra-side responses, only the SBBO and ABBO at the time of the 
execution against the first response will be included.
---------------------------------------------------------------------------

    \47\ Exchange Rule 531(c)(1)(ii)(A) would further provide that 
if the resting order executes against multiple contra-side 
responses, only the SBBO at the time of the execution against the 
first response will be included.
    \48\ Exchange Rule 531(c)(1)(ii)(B) would further provide that 
if the resting order executes against multiple contra-side 
responses, only the ABBO at the time of the execution against the 
first response will be included.
    \49\ The time the Exchange received the response order would be 
in nanoseconds and would be the time the response was received by 
the Exchange's network, which is before the time the response would 
be received by the System.
---------------------------------------------------------------------------

    Exchange Rule 531(a)(1)(ii)(D) provides that the existing Simple 
Order Report also includes the time difference between the time the 
resting order was received by the Exchange and the time the first 
response that executes against the resting order was received by the 
Exchange. The proposed Resting Simple Order Report would not include 
the same information because that timeframe could be for an extended 
period of time since the proposed Resting Simple Order Report focuses 
on orders that have been resting on the Simple Order Book for longer 
than 200 microseconds and, therefore, the Exchange believes is less 
likely to be valuable to the Recipient Member.
    Recipient Member's Response Information. Like current paragraph 
(a)(1)(iii) of Exchange Rule 531 for the existing Simple Order Report, 
proposed Rule 531(c)(1)(iii) would provide that the following 
information would be included in the Resting Simple Order Report 
regarding response(s) sent by the Recipient Member: (A) Recipient 
Member identifier; (B) the time difference between the time the first 
response that executes against the resting order was received by the 
Exchange and the time of each response sent by the Recipient Member, 
regardless of whether it executed or not; \50\ (C) size and type of 
each response submitted by Recipient Member; and (D) response reference 
number, which is a unique reference number attached to the response by 
the Recipient Member.
---------------------------------------------------------------------------

    \50\ For purposes of calculating this duration of time, the 
Exchange will use the time the first response that executes against 
the resting order and the Recipient Member's response(s) is received 
by the Exchange's network, both of which would be before the order 
and response(s) would be received by the System. This time 
difference would be provided in nanoseconds.
---------------------------------------------------------------------------

Timeframe for Data Included in Report
    The timeframe covered by the proposed Resting Simple Order Report 
is the primary difference between it and the existing Simple Order 
Report. The existing Simple Order Report provides data for executions 
and contra-side responses that occurred within 200 microseconds of the 
time the resting order was received by the Exchange. Meanwhile, the 
proposed Resting Simple Order Report would include the same data as the 
Simple Order Report but would focus on executions and contra-side 
responses that occurred after 200 microseconds of the time the resting 
order was received by the Exchange, and within 200 microseconds of 
receipt of any Member's first attempt to execute against the resting 
order after the initial 200 microsecond time period has expired. More 
specifically, the resting order must rest on the Simple Order Book for 
at least 200 microseconds and once that initial 200 microsecond period 
has passed, a Member must then submits an order to attempt to execute 
against that resting order. This event starts a second 200 microsecond 
period within which the proposed Resting Simple Order Report would 
include data on executions and contra-side responses submitted by the 
Recipient Member to execute against that resting order.
    For example, Member A submits an order that is posted to the Simple 
Order Book. 200 microseconds passes and Member A's order remains posted 
to the Simple Order Book. Then Member B enters a marketable order to 
execute against Member A's resting order, starting the second 200 
microsecond window. Within this next 200 microsecond window, Member C 
sends a marketable order to execute against Member A's resting Order. 
Because Member B's order is received by the Exchange before Member C's 
order, Member B's order executes against Member A's resting order. The 
proposed Resting Simple Order Report would provide Member C the data 
points necessary for that firm to calculate by how much time it missed 
executing against Member A's resting order.
    The above timeframe would be codified under proposed paragraph 
(c)(2) of Exchange Rule 531 which would provide that the proposed 
Resting Simple Order Report would include the data set forth under 
Exchange Rule 531(c)(1) described above for executions and contra-side 
responses that occurred (i) after 200 microseconds of the time the 
resting order was received by the Exchange and (ii) within 200 
microseconds of receipt

[[Page 64998]]

of the first attempt to execute against the resting order after the 
initial 200 microsecond time period under (c)(2)(i) of this paragraph 
has expired.
Scope of Data Included in the Resting Simple Order Report
    Like current paragraph (a)(3) of Exchange Rule 531 for the existing 
Simple Order Report, proposed paragraph (c)(3) of Exchange Rule 531 
would provide that the proposed Resting Simple Order Report will only 
include trading data related to the Recipient Member and, subject to 
the proposed paragraph (4) of Exchange Rule 531(c) described below, 
will not include any other Member's trading data other than that listed 
in paragraphs (1)(i) and (ii) of proposed Exchange Rule 531(c), 
described above.
Historical Data
    Like current paragraph (a)(4) of Exchange Rule 531 for the existing 
Simple Order Report, proposed paragraph (c)(4) of Exchange Rule 531 
would specify that the proposed Resting Simple Order Report will 
contain historical data from the prior trading day and will be 
available after the end of the trading day, generally on a T+1 basis.
2. Statutory Basis
    The Exchange believes the proposed rule changes are consistent with 
the Act and the rules and regulations thereunder applicable to the 
Exchange and, in particular, the requirements of section 6(b) of the 
Act.\51\ Specifically, the Exchange believes the proposed rule change 
is consistent with the section 6(b)(5) \52\ requirements that the rules 
of an exchange be designed to prevent fraudulent and manipulative acts 
and practices, to promote just and equitable principles of trade, to 
foster cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general, to protect investors and the public interest. 
This proposal is in keeping with those principles in that it promotes 
increased transparency through the dissemination of the optional 
Complex Order Report and Resting Simple Order Report to those 
interested in subscribing to receive the data. Additionally, the 
Exchange believes the proposed rule change is consistent with the 
section 6(b)(5) \53\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
---------------------------------------------------------------------------

    \51\ 15 U.S.C. 78f(b).
    \52\ 15 U.S.C. 78f(b)(5).
    \53\ Id.
---------------------------------------------------------------------------

    But for three differences, the description of the proposed Complex 
Order Report under Exchange Rule 531(b) is identical to that of the 
Simple Order Report under Exchange Rule 531(a). The first difference 
concerns the content of the proposed Complex Order Report, which would 
be limited to incoming complex orders that seek to remove liquidity 
from the Exchange's Strategy Book. The Simple Order Report includes 
information about incoming orders seeking to remove liquidity from the 
Simple Order Book. This difference is immaterial because both reports 
include basically the same information and seek to serve the same 
purpose, to provide the Recipient Member with the same type of data 
necessary for them to evaluate their own trading behavior and order 
interactions on the Exchange; however, the Simple Order Report contains 
data relevant to the Simple Order Book while the proposed Complex Order 
Report contains data relevant to the Strategy Book.
    The other two differences are that the Simple Order Report includes 
the SBBO, which is the Exchange's best bid or offer, and the ABBO, 
which is the best bid or offer of away exchanges. In their place, the 
proposed Complex Order Report would include the Complex SBBO and 
Complex ABBO. As discussed above, the Complex SBBO is calculated using 
the icSBBO combined with the best price currently available on the 
Strategy Book to establish the Exchange's best net bid or offer for a 
complex strategy.\54\ The Complex ABBO is calculated using the ABBO for 
each component of a complex strategy to establish the away markets' 
best net bid or offer for a complex strategy using OPRA data. The 
Exchange is providing the Complex SBBO and Complex ABBO because both 
are relevant and tailored to a Member that is entering a complex order 
to remove liquidity as part of a complex strategy and, therefore, more 
germane to the purpose of the Complex Order Report. The Exchange 
believes these differences are appropriate because providing the 
Complex SBBO in place of the SBBO and the Complex ABBO in place of the 
ABBO are more germane to the purpose of the proposed Complex Order 
Report.
---------------------------------------------------------------------------

    \54\ See supra note 11.
---------------------------------------------------------------------------

    The timeframe covered by the proposed Resting Simple Order Report 
is the primary difference between it and the existing Simple Order 
Report. However, this difference only pertains to the timeframe covered 
by each report, with each report containing the exact same data fields 
with one exception described here. The existing Simple Order Report 
provides data for executions and contra-side responses that occurred 
within 200 microseconds of the time the resting order was received by 
the Exchange. Meanwhile, the proposed Resting Simple Order Report would 
basically include the same data as the Simple Order Report but would 
focus on executions and contra-side responses that occurred after 200 
microseconds of the time the resting order was received by the Exchange 
and one additional difference. The one difference is that unlike the 
existing Simple Order Report, the proposed Resting Simple Order Report 
would not include the time difference between the time the resting 
order and first response that executes against the resting order are 
received by the Exchange. Each report focuses on 200 microsecond 
windows with the existing Simple Order Report's window starting at the 
time of receipt of the resting order and the proposed Resting Simple 
Order Report's window starting with the first attempt to execute 
against the resting order after the order was resting on the Simple 
Order Book for at least 200 microseconds.
    Like the Simple Order Report, the Exchange believes the proposed 
Complex Order Report and Resting Simple Order Report will serve to 
promote just and equitable principles of trade, remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system, and, in general protect investors and the public 
interest by providing Members access to information regarding their 
trading activity that they may utilize to evaluate their own trading 
behavior and order interactions. Also, like the Simple Order Report, 
the proposed Complex Order Report is designed for Members that are 
interested in gaining insight into latency in connection with complex 
orders that failed to execute against an order resting on the 
Exchange's Strategy Book by providing those Members data to analyze by 
how much time their complex order may have missed an execution against 
a contra-side order resting on the Strategy Book. Like the existing 
Simple Order Report, the proposed Resting Simple Order Report is 
designed for Members that are interested in gaining insight into 
latency in connection with orders that failed to execute against an 
order resting on the Exchange's Simple Order Book by

[[Page 64999]]

providing those Members data to analyze by how much time their order 
may have missed an execution against a contra-side order resting on the 
Simple Order Book. The Exchange believes that providing this optional 
latency data to interested Members is consistent with facilitating 
transactions in securities, removing impediments to and perfecting the 
mechanism of a free and open market and a national market system, and, 
in general, protecting investors and the public interest because it 
provides greater visibility into the latency of Members' incoming 
orders that they may use to optimize their models and trading patterns 
in an effort to yield better execution results by calculating by how 
much time their order may have missed an execution. This would, in 
turn, benefit other market participants who may experience better 
executions on the Exchange because those that use the proposed Complex 
Order Report and/or Resting Simple Order Report may re-calibrate their 
trading models and then increase their trading on the Exchange and 
volume of liquidity removing orders. This could lead to an increase in 
incoming liquidity removing orders resulting in higher execution rates 
for Members who primarily place resting orders on either the Strategy 
Book or Simple Order Book, or both. The proposed Complex Order Report 
and Resting Simple Order Report may benefit other market participants 
who would receive greater fill rates, thereby facilitating transactions 
in securities and perfecting the mechanism of the national market 
system.
    As discussed above, the Exchange's affiliates, MIAX, MIAX Pearl and 
MIAX Emerald, received ad hoc requests from their members for 
information regarding the timeliness of their attempts to execute 
against resting options liquidity on Strategy Books and Simple Order 
Books of those markets. The proposal promotes just and equitable 
principles of trade because it would provide latency information in a 
systematized way and standardized format to any Member that chooses to 
subscribe to the proposed Complex Order Report or Resting Simple Order 
Report. As a result, the proposal would also remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system by making latency information for liquidity-seeking orders 
available in a more equalized manner.
    The proposal further promotes just and equitable principles of 
trade by increasing transparency, particularly for Recipient Members of 
either or both the Complex Order Report and Resting Simple Order Report 
that may not have the expertise to generate the same information on 
their own. The proposed Complex Order Report may better enable 
Recipient Members to increase the fill rates for their liquidity-
seeking Complex Orders and the Resting Simple Order Report may better 
enable Recipient Members to increase the fill rates for their 
liquidity-seeking orders. At the same time, as is also discussed above, 
the Complex Order Report and Resting Simple Order Report promote just 
and equitable principles of trade and protect investors and the public 
interest because they are designed to prevent a Recipient Member of 
either report from learning other Members' sensitive trading 
information. The Complex Order Report and Resting Simple Order Report 
would not be real-time market data products, as they would provide only 
historical trading data for the previous trading day, generally on a 
T+1 basis. In addition, the data in the Complex Order Report regarding 
incoming orders that failed to execute would be specific to the 
Recipient Member's complex orders, and other information in the 
proposed Complex Order Report regarding resting orders and executions 
would be anonymized if it relates to a Member other than the Recipient 
Member. The same is true for the Resting Simple Order Report.
    The Complex Order Report and Resting Simple Order Report generally 
would contain three buckets of information each. The first two buckets 
include information about the resting order and the execution of the 
resting order. The Exchange anticipates that this information will be 
available from the Exchange's proprietary data feeds or derivable from 
OPRA. For example, for the Complex Order Report, the Exchange plans to 
offer the Complex Top of Market (``cToM'') data feed which will provide 
real-time quote and last sale information for all displayed orders on 
the Strategy Book.\55\ For the Resting Simple Order Report, OPRA 
provides bids, offers, and consolidated last sale and quotation 
information for options trading on all national securities exchanges, 
including the Exchange. In addition, the Exchange plans to offer the 
Top of Market (``ToM'') data feed which will provide real-time quote 
and last sale information for all displayed orders on the Simple Order 
Book.\56\
---------------------------------------------------------------------------

    \55\ See MIAX Sapphire Options Exchange User Manual, Version 
1.0.0, Section 5.07 (dated December 11, 2023), available at https://www.miaxglobal.com/sites/default/files/job-files/MIAX_Sapphire_User_Manual_v1.0.0_2024_06_18.pdf.
    \56\ See MIAX Sapphire Options Exchange User Manual, Version 
1.0.0, Section 5.06 (dated December 11, 2023), available at https://www.miaxglobal.com/sites/default/files/job-files/MIAX_Sapphire_User_Manual_v1.0.0_2024_06_18.pdf.
---------------------------------------------------------------------------

    The first bucket of information contained in the proposed Complex 
Order Report and Resting Simple Order Report for the resting order 
includes the time the resting order was received by the Exchange, the 
symbol, unique reference number assigned at the time of receipt, side 
(buy or sell), and the displayed price and size of the resting order. 
The symbol, origin type, side (buy or sell), and displayed price and 
size are also available via the Exchange's proprietary data feeds 
depending on which report a Member subscribes to. The first bucket of 
information for both proposed reports would also indicate whether the 
Recipient Member is an Affiliate of the Member that entered the resting 
order. This data field for both proposed reports would not indicate the 
identity of the Member that entered the resting order and would simply 
allow the Recipient Member to better understand the scenarios in which 
it may execute against the orders of its Affiliates.\57\
---------------------------------------------------------------------------

    \57\ The Exchange surveils to monitor for aberrant behavior 
related to internalized trades and identify potential wash sales.
---------------------------------------------------------------------------

    For the proposed Complex Order Report, the second bucket of 
information pertains to the execution of the resting order and includes 
the Complex SBBO and Complex ABBO at the time of execution and for the 
proposed Resting Simple Order Report, pertains to the execution of the 
resting order and includes the SBBO and ABBO at the time of execution. 
These data points for both proposed reports are also derivable from 
information disseminated via OPRA or available via the Exchange's 
proprietary data feeds, depending on the type of report. The second 
bucket of information for both reports would also indicate whether the 
response was entered by the Recipient Member. For both reports, this 
data point would be simply provided as a convenience and, if not 
entered by the Recipient Member, this data point would be left blank so 
as not to include any identifying information about other Member 
activity. For the Complex Order Report, the second bucket of 
information would also include the size, time and type of first 
response \58\ that executes against the resting order; as well as the 
time difference between the time the resting order and first response

[[Page 65000]]

that executes against the resting order are received by the Exchange. 
These data points would assist the Recipient Member in analyzing by how 
much time their order may have missed an execution against a contra-
side order resting on the Strategy Book. For the Resting Simple Order 
Report, the second bucket of information also includes the size, as 
well as the time and type of first response that executes against the 
resting order. These data points would assist the Recipient Member in 
analyzing by how much time their order may have missed an execution 
against a contra-side order resting on the Simple Order Book. Unlike 
the existing Simple Order Report and proposed Complex Order Report, the 
proposed Resting Simple Order Report would not include the time 
difference between the time the resting order and first response that 
executes against the resting order are received by the Exchange. The 
proposed Resting Simple Order Report would not include this data point 
because the Exchange understands Recipient Members may not find it 
useful due to the fact that the proposed Resting Simple Order Report 
focuses on orders that have been resting on the Simple Order Book for 
longer than 200 microseconds. Therefore, the Exchange does not propose 
to include this data point as a means to streamline the proposed 
Resting Simple Order Report and remove unnecessary data.
---------------------------------------------------------------------------

    \58\ See supra note 25.
---------------------------------------------------------------------------

    For both proposed reports, the third bucket of information would be 
about the Recipient Member's response(s) and the time their response(s) 
is received by the Exchange. This would include the time difference 
between the time the first response that executes against the resting 
order was received by the Exchange and the time of each response sent 
by the Recipient Member, regardless of whether it executed or not. As 
above, for both proposed reports, this data point would assist the 
Recipient Member in analyzing by how much time their order may have 
missed an execution against a contra-side order resting on the Strategy 
Book. This bucket would also include the size and type of each response 
submitted by the Recipient Member, the Recipient Member identifier, and 
a response reference number, which is selected by the Recipient Member. 
Each of these data points are unique to the Recipient Member and should 
already be known by the Recipient Member even if not included in the 
Complex Order Report or Resting Simple Order Report, as the case may 
be.
    The Exchange proposes to provide the Complex Order Report and 
Resting Simple Order Report on a voluntary basis and no Member will be 
required to subscribe to either report. The Exchange notes that there 
is no rule or regulation that requires the Exchange to produce, or that 
a Member elect to receive, either proposed report. It would be entirely 
a business decision of each Member to subscribe to either proposed 
report. The Exchange proposes to offer the Complex Order Report and 
Resting Simple Order Report as a convenience to Members to provide them 
with additional information regarding trading activity on the Exchange 
on a delayed basis after the close of regular trading hours. A Member 
that chooses to subscribe to either proposed report may discontinue 
receiving either at any time if that Member determines that the 
information contained in the Complex Order Report or Resting Simple 
Order Report is no longer useful.
    In summary, the proposed Complex Order Report and Resting Simple 
Order Report will help to protect a free and open market by providing 
additional data (offered on an optional basis) to the marketplace and 
by providing investors with greater choices.\59\ Additionally, the 
proposal would not permit unfair discrimination because the proposed 
Complex Order Report and Resting Simple Order Report will be available 
to all Exchange Members.
---------------------------------------------------------------------------

    \59\ See Sec. Indus. Fin. Mkts. Ass'n (SIFMA), Initial Decision 
Release No. 1015, 2016 SEC LEXIS 2278 (ALJ June 1, 2016) (finding 
the existence of vigorous competition with respect to non-core 
market data).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended.
Inter-Market Competition
    The proposed Complex Order Report and Resting Simple Order Report 
will allow the Exchange to provide new options for Members to receive 
historical market data. The proposed Complex Order Report and Resting 
Simple Order Report will also further enhance inter-market competition 
between exchanges by allowing the Exchange to expand its product 
offerings to include additional reports to provide latency information 
requested by Members. The latency information that would be provided in 
the proposed Complex Order Report and Resting Simple Order Report would 
enhance competition between exchanges because it would allow Recipient 
Members to recalibrate their models and trading strategies to improve 
their overall trading experience on the Exchange. This may improve the 
Exchange's overall trading environment resulting in increased liquidity 
and order flow on the Exchange. In response, other exchanges may 
similarly seek ways to provide latency related data in an effort to 
improve their own market quality. Further, at least one other competing 
exchange offers substantively identical reports as the Exchange's 
Simple Order Report and proposed Complex Order Report.\60\
---------------------------------------------------------------------------

    \60\ See BOX Exchange LLC Rules 7350(b) and (c).
---------------------------------------------------------------------------

Intra-Market Competition
    The proposed rule change to offer the optional Complex Order Report 
and Resting Simple Order Report is in response to Member interest and 
requests for such information at the Exchange's affiliates, MIAX and 
MIAX Emerald. The Exchange does not believe the proposed Complex Order 
Report or Resting Simple Order Report will have an inappropriate burden 
on intra-market competition between Recipient Members and other Members 
who choose not to receive either report. As discussed above, the first 
two buckets of information included in the Complex Order Report and 
Resting Simple Order Report (with one minor exception described above) 
contain information about the resting order and the execution of the 
resting order, both of which are generally available to Members that 
choose not to receive the Complex Order Report or Resting Simple Order 
Report from other sources, such as by deriving these data points from 
OPRA or obtaining them from the Exchange's proprietary data feeds. The 
third bucket of information pertains to the Recipient Member's response 
and the time their response is received by the Exchange, information 
which latency sensitive Members that do not subscribe to the proposed 
Complex Order Report or Resting Simple Order Report could obtain on 
their own based on their knowledge of when they sent their response to 
the Exchange and via timestamp information provided by the 
acknowledgment message received from the Exchange. However, latency 
sensitive Members that do not subscribe to the proposed Complex Order 
Report or Resting Simple Order Report would not be able to obtain the 
time difference between the time the first response that executes 
against the resting order was received by the Exchange and the time of 
each response sent by the Recipient Member. Such latency sensitive 
Members may not view this information as beneficial based on their own 
trading models and systems. Other Members

[[Page 65001]]

that do not subscribe to the proposed Complex Order Report or Resting 
Simple Order Report may not view either proposed report as useful due 
to their own trading behaviors and business models. Such Members may 
not be latency sensitive and may be interested primarily in providing 
resting liquidity on the Exchange's Simple Order Book or Strategy Book, 
or they may simply be connected to the Exchange for best execution 
purposes or to comply with the trade-through requirements under Chapter 
XIV of the Exchange's Rules.\61\ Additionally, some Members may already 
be able to derive a substantial amount of the same data that is 
provided by some of the components based on their own executions and 
algorithms.
---------------------------------------------------------------------------

    \61\ Chapter XIV of the Exchange Rules incorporates by reference 
Rule 1401, Order Protection, of the Exchange's affiliate, MIAX.
---------------------------------------------------------------------------

    In sum, if the proposed Complex Order Report or Resting Simple 
Order Report is unattractive to Members, Members will opt not to 
receive either report. Accordingly, the Exchange does not believe that 
the proposed change will impair the ability of Members or competing 
order execution venues to maintain their competitive standing in the 
financial markets.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days after the date of the filing, or such 
shorter time as the Commission may designate if consistent with the 
protection of investors and the public interest, it has become 
effective pursuant to section 19(b)(3)(A)(iii) of the Act \62\ and Rule 
19b-4(f)(6) \63\ thereunder.
---------------------------------------------------------------------------

    \62\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \63\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \64\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\65\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposed 
rule change may become operative upon filing. The Exchange states that 
waiver of the 30-day operative delay would enable the Exchange to make 
the Complex Order Report and the Resting Simple Order Report available 
to Exchange Members on August 12, 2024, the date of the proposed launch 
of the Exchange, and thus enable the Exchange to make information for 
liquidity-seeking orders available to Exchange Members in a more 
equalized and timelier manner. The Exchange states that other options 
exchanges currently offer substantially similar reports.\66\ For these 
reasons, and because the proposal does not raise any new or novel 
issues, the Commission finds that waiver of the 30-day operative delay 
is consistent with the protection of investors and the public interest. 
Accordingly, the Commission hereby waives the 30-day operative delay 
and designates the proposal operative upon filing.\67\
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    \64\ 17 CFR 240.19b-4(f)(6).
    \65\ 17 CFR 240.19b-4(f)(6)(iii).
    \66\ See supra notes 7, 8 and 60.
    \67\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
section 19(b)(2)(B) \68\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \68\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-SAPPHIRE-2024-05 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-SAPPHIRE-2024-05. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for website viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE, 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-SAPPHIRE-2024-05 and should 
be submitted on or before August 29, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\69\
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    \69\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-17504 Filed 8-7-24; 8:45 am]
BILLING CODE 8011-01-P